As part of the Federal Housing Finance Agency’s directive to excise non-performing loans (NPLs) and deeply delinquent loans from its residential mortgage portfolio, Fannie Mae announced on Tuesday its first bulk NPL sale by auction of 2016 and fourth overall.
The NPL offering announced Tuesday (FNMA 2016-NPL1) includes 6,700 loans totaling $1.35 billion in aggregate unpaid principal balance (UPB), making it the largest Fannie Mae NPL sale of the four in terms of UPB. The previous largest was $1.24 billion in November 2015.
Fannie Mae’s most recent offering includes four larger pools and a Community Impact Pool (FNMA 2016-CIP1), a geographically-focused, high occupancy pool that is marketed to encourage participation from smaller investors, non-profits, and minority- and women-owned businesses in the bidding. The Community Impact pool is focused in Miami and includes 60 loans totaling $14.5 million in UPB. It will be Fannie Mae’s second sale of a Community Impact Pool; the first occurred in August 2015, when non-profit New Jersey Community Capital purchased a pool of 75 loans for $11 million.
“We are pleased to be offering our second Community Impact Pool sale, which will provide these borrowers with additional options to avoid foreclosure, while reducing the number of seriously delinquent loans that we own,” said Joy Cianci, Fannie Mae’s SVP for Credit Portfolio Management. “We will continue to structure pool sales to encourage participation by non-profits and minority- and women-owned businesses.”
“These transactions are intended to reduce the number of seriously delinquent loans that Fannie Mae owns, to help stabilize neighborhoods, and to offer borrowers access to additional foreclosure prevention options.”
Joy Cianci, Fannie Mae
Bids are due for the four larger pools on February 3, while bids are due for the Community Impact Pool on February 18. Qualified bidders must meet FHFA’s guidelines, which include offering a “waterfall” of resolution tactics to the delinquent borrowers and exhausting all loss mitigation possibilities before proceeding with foreclosure. The loans offered in Fannie Mae’s NPL auctions are deeply delinquent, sometimes by as many as one, two, or three years, meaning many of them are either in some stage of loss mitigation or are in foreclosure.
Fannie Mae’s previous three bulk NPL auctions, all executed in 2015, have resulted in the sale of approximately 13,900 deeply delinquent, non-performing loans totaling approximately $2.73 billion in UPB. In April 2015 when Fannie Mae made the announcement that it would be conducting bulk NPL auctions, Cianci said, “These transactions are intended to reduce the number of seriously delinquent loans that Fannie Mae owns, to help stabilize neighborhoods, and to offer borrowers access to additional foreclosure prevention options. Our goal is to market these loans to a diverse range of buyers.”
The most recent Fannie Mae NPL sale was completed in November and included 7,000 loans sold in three pools, totaling $1.24 billion in UPB. Fortress (New Residential Investment Corp.) was the winner for two of the pools and Goldman Sachs (MTGLQ Investors, L.P.) was the winner of the other.